Arbitrage Calculator
Find risk-free profit opportunities between prediction market platforms
NO price = 100 - 56 = 44c
Buy YES on Polymarket at 52c and NO on Kalshi at 44c. Regardless of the outcome, you receive $1.00 per contract set. Your total cost is $0.9600 per set (including fees), guaranteeing a $0.0400 profit (4.17%) per set. With a $1,000 investment, you buy 1041.7 contract sets for a guaranteed profit of $41.67.
Total Cost = YES_A + NO_B + (YES_A x Fee_A%) + (NO_B x Fee_B%)
Arbitrage = Total Cost < $1.00
Profit/Set = $1.00 - Total Cost
Contracts = Investment / Total Cost
Profit % = (Payout - Investment) / Investment x 100
What is Arbitrage?
Arbitrage is the practice of exploiting price differences between two or more markets to lock in a risk-free profit. In traditional finance, arbitrage opportunities arise when the same asset trades at different prices on different exchanges. In prediction markets, arbitrage occurs when the combined cost of covering all outcomes is less than the guaranteed payout, allowing you to profit regardless of which outcome occurs.
How Prediction Market Arbitrage Works
Prediction markets like Polymarket and Kalshi let you buy contracts that pay out $1.00 if an event occurs (YES) or does not occur (NO). On a single platform, YES + NO prices typically sum to approximately $1.00 (minus the spread). However, when the same event is listed on multiple platforms, price discrepancies can emerge. If you can buy YES on Platform A and NO on Platform B for a combined cost less than $1.00, you have found an arbitrage opportunity. One of your contracts will always pay out $1.00 regardless of the outcome, guaranteeing a profit equal to $1.00 minus your total cost.
Understanding Platform Fees
Platform fees are critical in arbitrage calculations because they directly reduce your profit margin. Polymarket currently charges approximately 2% on winning positions, while Kalshi charges around 7% per transaction. These fees are applied to the cost of your contracts and can easily eliminate a small arbitrage opportunity. For example, a 4-cent price discrepancy might look profitable at first glance, but after accounting for 2% and 7% fees on each side, the opportunity may vanish entirely. Always factor in all fees, including potential withdrawal fees and gas costs (for on-chain platforms), before executing an arbitrage trade.
Risks of Prediction Market Arbitrage
While arbitrage is theoretically risk-free, several practical risks exist. Execution risk: Prices can move between when you spot the opportunity and when you execute both legs of the trade, especially in fast-moving markets. Settlement risk: Different platforms may interpret the same event differently, leading to scenarios where both your YES and NO contracts lose. Platform risk: One platform could freeze withdrawals, change rules, or become insolvent before settlement. Liquidity risk: You may not be able to fill your desired size at the quoted price, resulting in slippage. Capital lockup: Your funds are locked until the event resolves, which could be days, weeks, or months, reducing your annualized return.
Why Arbitrage Opportunities Exist
Prediction market arbitrage opportunities arise due to market inefficiency. Different platforms attract different user bases with varying opinions and information. Polymarket is popular with crypto-native traders, while Kalshi appeals to a more traditional finance audience. These different participant pools can lead to genuine price discrepancies on the same events. Additionally, capital barriers (moving funds between platforms takes time), regional access restrictions, and differences in fee structures all contribute to price dislocations that create arbitrage windows. These opportunities tend to be fleeting, as sophisticated market makers and automated bots actively monitor for and exploit them, pushing prices back toward equilibrium.